The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
London / Reuters
Barclays reported a worse than expected 33 percent slump in pretax profits for the first three months of the year, as the lender followed its US peers in reporting falling investment banking revenues in a weak global market environment.
Barclays said first quarter pretax profits fell to £793 million ($1.15 billion), just below the average forecast of 846 million pounds from analysts polled by the company.
Investment banking profits fell by 31 percent for the quarter, driven by reduced trading activities and rising bad loans from exposure to the troubled oil and gas sector.
Barclays had flagged the poor performance in its investment banking division, warning on April 5 that it
expected weak results in the unit compared to the same period in 2015.
The lender also said it is in discussions to sell its French retail banking operations to AnaCap Financial Partners, as part of a plan to shed so-called ‘non-core’ assets a bid to cut costs and restore profits.
The restructuring announced on March 1 saw the British lender
announce plans to sell its 62 percent stake in Barclays Africa Group over the next two to three years, exiting the continent in order to focus on the UK and the United States.
The bank said performance of its two core units, Barclays UK and Barclays Corporate and International, was strong with an aggregate 9.9 percent return on equity, driven by the UK business, which posted a 20.5 percent standalone return.
Total income at the bank’s Consumer, Cards and Payments unit increased 24 percent to 917 million pounds, reflecting continued growth in Barclaycard US and Germany.
“The performance of the core today shows the potential power of the group once it is freed from the drag of non-core,†Chief Executive Jes Staley said in a statement marking the first results since it launched its ‘transatlantic’ strategy.
The plan came at a cost to shareholders, with Barclays cutting its dividend for 2016 to 3 pence per share from 6.5p in 2015 in a bid to maintain capital levels while shedding unwanted assets.
Analysts at Bernstein warned of tough times ahead, pointing to the potential for a spike in credit card impairments risk, weak investment banking performance and the uncertainty of disposals that Barclays is betting on to shore up its capital.
Barclays’ common equity Tier 1 (CET1) ratio, a key measure of financial strength, fell to 11.3 percent in the first quarter from 11.4 percent at the end of 2015.
Barclays is a British multinational banking and financial services company headquartered in London. It is a universal bank with operations in retail, wholesale and investment banking, as well as wealth management, mortgage lending and credit cards. It has operations in over 50 countries and territories and has around 48 million customers.
Barclays is organised into four core business: Personal & Corporate (Personal Banking, Corporate Banking, Wealth & Investment Management), Barclaycard, Investment Banking and Africa.
Barclays has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. It has a secondary listing on the New York Stock Exchange.
In August 2015, it was announced that Barclays would become the first UK high street bank to start accepting bitcoin, with the bank revealing that it plans to allow users to make
charitable donations using the virtual currency.
In March 2016, it was announced that Barclays has plans to sell its Africa business amid falling profits.
In April 2016, Barclays announced a deal that allowed its UK customers to use Apple Pay.
